SEBI Extends Retail Algo Trading Norms Deadline to August 1

The Securities and Exchange Board of India (SEBI) has extended the timeline for implementing its regulatory framework on algorithmic trading for retail investors. The original deadline of April 1, 2025, has now been shifted to August 1, 2025.

Reason for Extension

SEBI’s extension comes after stock exchanges submitted a request for additional time. Exchanges are working with the Brokers’ Industry Standards Forum (ISF) to finalise the implementation standards. According to SEBI’s circular, exchanges are required to update internal systems, modify by-laws, and inform brokers of the changes.

Framework Details

SEBI introduced the algo trading framework on February 4, 2025. The regulations apply to retail investors who use computer programs to automate order execution. The provisions define the responsibilities of stock exchanges, brokers, and algo providers in the trading process.

Brokers will act as principals, while algo providers will function as agents using broker-authorised APIs. All algorithmic orders will be tagged with unique identifiers for audit and tracking purposes.

Registration and Compliance

Algo providers must be registered with stock exchanges before being onboarded by brokers. These brokers will be responsible for monitoring complaints related to algos and ensuring compliance. In addition, brokers will implement two-factor authentication and API control access.

Retail investors who develop and use their own algos must register them if they exceed a specified order-per-second threshold. These self-developed algos can only be used by the investor and their immediate family.

White-Box vs Black-Box Algos

SEBI has categorised algos into two types:

• White-box algos: Logic is visible and transparent.
• Black-box algos: Logic is hidden. Providers offering these must register as research analysts and maintain research reports.

Conclusion

The new deadline provides more time for exchanges and brokers to align with SEBI’s framework. The provisions will be applicable starting August 1, 2025, and aim to establish a standardised approach for retail algo trading in India.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.